In Part 2 of this series, we learned how to create copy that compels your prospects to click on your ad, and discussed the importance of landing your prospects on a page that maximizes your investment in their click. In this installment, we'll learn how to:

• Precisely limit the distribution of your ad to only those prospects that are most interested
• Beat the competition with creative bidding strategies

Limiting Your Distribution – The Key to Success

If there is one component of AdWords that's most often neglected, it's controlling the distribution of your ad impressions to only those prospects who are most targeted. According to the Google AdWords Website:

Each account is evaluated after every 1,000 ad impressions are delivered on Google. If the CTR for your account falls below a minimum required CTR (which varies by ad position, but is 0.5% for the top spot and slightly reduced for each subsequent position), we'll only show your ads occasionally on your underperforming keywords. (The status of each of your keywords will be clearly indicated in your keyword reports.) If your keywords don't improve, we may disable them. You'll then need to refine your campaign to improve its performance and effectiveness. After editing your campaign, you may restore full ad delivery to your account.

In short, if your ads don't get a decent clickthrough rate (CTR) they will be disabled -- your ads won't be shown. Conversely, if you achieve a high clickthrough rate for a very general term, you will potentially be spending a huge amount of money. So, how do you get your ads more closely targeted to your audience? Here's the secret -- use the built-in tools that Google provides:

• Phrase Match
• Exact Match
• Negative Keywords

Remember, the default setting for AdWords is "Broad Match". This will see your ad displayed when any keyword from your search phrase is typed in any order. So, if you target 'Palm Pilot', under Broad Match, your ad will be shown when someone searches for: airline pilot, auto-pilot, pilot light, palm reader, palm trees, etc. None of these search terms are in the least bit targeted!

The first step in narrowing the audience to which your ad is displayed is to use the 'Phrase Match' feature in AdWords. This limits your ad to those searches that include your search phrases in order. To activate the 'Phrase Match' feature, simply enclose your search terms in quotation marks, for example, "Palm Pilot". Now, only those terms that include both Palm and Pilot in that order will be shown your ad, such as: free palm pilot, palm pilot software, and palm pilot V.

This may be a good first step for some, but I've found that it's necessary to refine the distribution of my ads even further by using the 'Exact Match' feature. This is particularly useful for increasing the clickthrough rates of poorly performing ads. The 'Exact Match' feature will only display your ads when the exact search phrase is entered. The 'Exact Match' feature is activated once you place parentheses around your search term. In our example, we'd use the term [Palm Pilot]. Now, only the exact search term 'Palm Pilot' will cause our AdWords ad to be displayed.

The third tool is 'Negative Keywords'. This feature simply excludes your ad from displaying along side the search results of any keywords you choose. If you're selling a product or service, you may want to use 'free' as a negative keyword, thus preventing your ad from displaying when the word 'free' is part of the search phrase. To enable negative keywords you simply place a minus sign in front of your search term. If, in our example, we wanted to exclude all searches for 'free palm pilot' and 'palm pilot software', our keyword list would include the following entries:

• free
• software

Use of these targeting features will instantly place you into an elite category of Google AdWords users who have clickthrough and conversion rates at the top of their categories. Now, let's look at how to set your bid.

Creative Strategies for Successful Bidding

There are many different approaches to the process of bidding for position within AdWords. A $5.00 minimum deposit is required to set up any AdWords account, but once it's set up, any of the listed bidding options are available to you.

The 'Always be #1, No Matter What it Takes' Strategy

This strategy espouses the view that being #1 is everything. It is true that the top listing gets the most traffic. In some cases, the top listing can generate much more traffic than the lower listings -- even the second listing. The top listing will also always be the most expensive spot for any given keyword or phrase, and, depending on the popularity of the search term and the bid required to secure it, the top listing may become very expensive to maintain.

Also, as AdWords uses the clickthrough rate to weight your listing, it may simply be impossible to sustain the number one position at any bid price. Remember, too, that Google currently has a $50 per click maximum bid limit. The 'Always be #1' strategy is also prone to bidding wars.

The 'Never Bid More Than the Minimum Bid' Strategy

This strategy focuses on cost containment. Given a vast assortment of search terms, it is likely that some top bids will be only as high as the minimum bid. These terms will most likely be less popular terms that don't generate a significant amount of clicks.

This strategy assumes that even where the top bids are $1 or more, some visitors will read through the entire list of advertisements, and click on much lower bids. As of the writing of this article, Google AdWords bids can range in price from 5 cents, to $50.

The 'Position Yourself Next to a Weaker Competitor' Strategy

The thrust of this strategy is to position your listing as high as possible, while looking critically at competitor's listings and offers. You then position yourself next to a competitor whose price is much higher than yours for the same item, or whose offering is in some other way uncompetitive with yours, thereby making your offering seem even more attractive.

For example, if you mention a sales price of $149 for a Palm V in your listing, and the listing directly above or below yours displays a price of $99 for a Palm V, your offer appears overpriced. However, if there is a listing that offers the Palm V at $199, positioning your listing directly above or below the $199 price can make your price of $149 look more attractive.

The 'Steady State' Strategy

This strategy is similar to the 'Never Bid More Than the Minimum Bid' strategy, but with a twist. You calculate the amount that you are willing to pay for each qualified customer that lands on your site, and always bid exactly that amount. For example, let's say that you calculate that you are more than willing to spend $1.35 for each qualified customer who lands on your site. You simply bid $1.35 on your best keywords, regardless of what others around you bid.

This strategy is often employed by bidders who take a "hands off" approach to their bids. They simply want to set the account up once, and let it run on 'autopilot', without much (if any) maintenance.

Of course, you can access your AdWords account as frequently as you like, and adjust your maximum bid to give the return on investment (ROI) you require. Measuring and maximizing your ROI will be the topic of the forth and final installment of this series.

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Derek Vaughan has extensive online marketing experience, including marketing ecommerce at ESPN.com. and NASCAR.com, and directing marketing for Affinity Internet and Aplus.Net in the highly competitive Web hosting arena. He is currently director of www.cpureview.com
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